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ChoicePoint-FBI Deal Raises New Privacy Questions

By Martin H. Bosworth
ConsumerAffairs.com

May 16, 2006

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While the NSA's practice of collecting billions of telephone records drew outrage in many quarters, another potential threat to individual privacy flew smoothly under the public radar -- the lucrative extension of a contract between the Federal Bureau of Investigation and notorious data broker ChoicePoint.

Last month, the FBI awarded a five-year, $12 million contract for ChoicePoint to improve the agency's software systems for investigation and analysis.

The deal was sharply criticized by Sen. Patrick Leahy (D-Vt.), who called the Alpharetta, GA-based information seller "the poster child for lax security."

Leahy was referring to the infamous data breach of ChoicePoint's records by a ring of Nigerian identity thieves, leading to the theft of information on nearly 150,000 people.

The theft sparked public awareness of the relationship between data brokers and identity theft, and led to several convictions and a $15 million fine for ChoicePoint by the Federal Trade Commission (FTC).

Attorney General Alberto Gonzales defended the FBI-ChoicePoint deal, saying that the contract was for technology and hardware, not data services.

"Obviously, there were mistakes made by ChoicePoint, and they suffered the consequences for that," he said.

FBI Director Robert Mueller said the deal was absolutely necessary in order to upgrade the FBI's outdated information technology infrastructure and systems.

FBI Lags in Data Prowess

The FBI has become something of a laughing stock in tech circles because ot its flawed technology spending and inability to provide even the most basic services to its agents, including not being able to equip 8,000 of its 30,000 agents with working e-mail addresses.

The FBI also came under fire for scuttling a $170 million attempt to upgrade its case management system with no real results.

A skeptical Leahy pressed Gonzales and Mueller during hearings for the 2007 Justice Department budget. In a statement released prior to the hearings, Leahy criticized the spending of $30 million on private data brokers by the Justice Department and the Department of Homeland Security.

"The FBI and the Justice Department offer only a blind eye, a deaf ear and stunning misjudgment with decisions like this that show such blatant disregard for the privacy and security of the most sensitive personal and financial information of the American people," Leahy said.

"The American people deserve to know why the FBI, with its own recent history of poor judgment in wasting hundreds of millions of taxpayers' dollars on computer contracts, entered into this contract."

Leahy himself was the victim of a data theft when Bank of America misplaced data tapes on 1.2 million of its government customers.

Leahy has pushed for stronger federal protections for victims of identity theft, and greater penalties for companies that are lax in protecting customer data, through his "Personal Data Privacy and Security Act," introduced to Congress last year.

For its part, ChoicePoint reiterated that the contract was not designed to provide data services to the public press.

Carol DiBattiste, ChoicePoint's privacy officer, told ConsumerAffairs.com that "data sales to all government customers, for all purposes, is only five percent of our total annual revenue."

"Generally, our data sales support the day-to-day investigation of crimes by providing public records data or publicly available data on people, property or businesses who are in some way related to an open, ongoing inquiry," DiBattiste said.

Gone Fishin'

ChoicePoint's Matt Furman insisted that the company does not provide data for "wholesale" use to any government agency. "We also do not sell or license to the government any technology platforms that can be used to mine or 'fish'…in a large database of consumer information," he said.

However, ChoicePoint has partnered with the FBI and top government contractor SAIC to do exactly that, or very close to it, on several occasions.

In 2005, the government-focused news service GovExec published information claiming that ChoicePoint had built customized software and services designed to target specific subjects continuously, parsing new information on the subject from his or her movements as they get it.

Although both Furman and the FBI insisted that ChoicePoint doesn't engage in "fishing" expeditions looking for people, Furman admitted that the data broker "connects a previously known, identified 'needle-in-the-proverbial haystack' with other, related needles."

In Furman's estimation, ChoicePoint does enable government agencies to connect the dots on targets they are searching for, and what constitutes a target was based on the requesting agency's "plausible, potential risk or threat determination."

SAIC developed an "information services suite" called ADAM, specifically designed and marketed to parse ChoicePoint's massive databases for, in its words, "the ability to obtain and analyze enormous amounts of data to create explicit profiles of target groups and collect critical data on each of the individual members of that group."

ADAM offers customizable reports tailored to include everything from Social Security Number verification to bankruptcy and credit histories, according to the needs of the client, and all from ChoicePoint's data troves. ADAM clients have included government agencies such as the Immigration and Naturalization Service (INS, now known as Immigration and Customs Enforcement, or ICE), and the Internal Revenue Service.

Back Scratch Fever

Although ChoicePoint has gone out of its way to repair its tarnished image in the public eye, from paying its fine to hiring former Transportation Security Administration administrator DiBattiste to handle its compliance and privacy issues, the company is still nearly synonymous with "identity theft" and "data breach."

So why would the nation's number-one criminal investigation agency trust ChoicePoint to handle its already troubled technology upgrades?

For one thing, the FBI already enjoys a cozy relationship with ChoicePoint, as its massive data mining of credit reports, insurance records, and personal information is a treasure trove for government agencies looking to create comprehensive profiles of terrorists, organized crime leaders -- and others.

Because of the Privacy Act's injunction against government agencies creating databases of individual Americans' records, the FBI and its sister bureaus have increasingly turned to private data brokers like ChoicePoint to provide them with information.

The PATRIOT Act greatly strengthened the ability of the Justice Department to demand identity verification and investigation in virtually all business transactions, and ChoicePoint led the charge in providing "automated ID verification solutions" for banks and other institutions to track a person's money trail with the click of a mouse button.

Another reason may be the simplest of all -- money. ChoicePoint's management and corporate board reads like a "Who's Who" of players in the telecommunications, energy, and banking industries, with former and current members of AT&T/SBC, Bank of America, and Home Depot co-founder Kenneth Langone among them.

Langone, a renowned philanthropist and charitable donor, is also well-known for his political generosity.

The Center for Responsive Politics tallied almost $80,000 in contributions to candidates in the 2002 and 2004 elections from Langone, most of them Republicans. Senate Judiciary Committee chair Arlen Specter (R-PA), for instance, received $4,000 in contributions from Langone through his investment firm, Inverned Associates LLC.

Specter is the co-author of Sen. Leahy's legislation designed to provide greater oversight of data brokers.

That kind of favor-trading in an election year can easily lead to plum contracts being handed out for friendly companies, or what investigative journalist Greg Palast called "the lucrative business of fear."

In discussing the FBI-ChoicePoint deal, Palast said it was "a strange, lucrative link-up between the Administration's Homeland Security spy network and private companies operating beyond the reach of the laws meant to protect us from our government."

DiBattiste blasted Palast's comments as "tabloid journalism," saying that there was no definitive connection between the FBI contract and the current controversy over the NSA spy program.

"These articles and comments are false and misleading," she said. "They are not based on facts and mischaracterize what we do."

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